Y Combinator-backed Contagion merges with Health Month to form Habit Labs, moves from SF to Seattle

McCabe

Jen McCabe, who founded the Y Combinator-backed startup Contagion, thought about keeping her company in the San Francisco Bay Area upon merging with Buster Benson’s Health Month. But, after taking a closer look at Seattle’s developing startup community, she realized that the newly-formed company, dubbed Habit Labs, would fit better in the Pacific Northwest.

“Many of the types of people who are critical to successful startup growth and scalability post-launch make their home in Seattle,” McCabe explains. “And they tend to enjoy active lifestyles that are advantageous to a company devoted to building tech that changes behavior for the better, like Habit Labs.”

We’ve been writing a lot about the pluses and minuses of the Seattle startup community, pointing out some of the folks who’ve taken their projects to the Bay Area in order to pursue funding or better opportunities. So, given that debate, it is interesting to see McCabe pick the Northwest.

The entrepreneur — who started Contagion while participating in the startup incubator Y Combinator and created the app I Move You — had additional reasons for relocating to Seattle. Some of her investors — including Andy Sack and Chris DeVore at Founder’s

Buster Benson

Co-op — are located here. Also, Benson — the former Amazon.com employee and Robot Co-op co-founder who is now serving as CTO of Habit Labs — is based here.

But McCabe said that those reasons alone didn’t do it, noting that she became especially impressed with the region’s talent base on several visits here and after speaking to her colleagues about the region.

“… The town is a haven for talented, experienced engineers, designers, artists, community managers, PR folks, and the like,” she says. “We’ve had no problems attracting awesome creative people wanting to join the team.”

One of those new members of the team is Scott Neilson, an experienced designer whose worked at Amazon, Google, Trusera, and, most recently, Gist. McCabe said finding that level of talent in the Bay Area is especially difficult.

“Many startup friends I know from Y Combinator raised money successfully … but then hit a brick wall when it came to hiring in San Francisco,” she said. “If you’ve raised seed or angel funding, but are having a hard time hiring in the Bay, a move to Seattle might be just the ticket.”

McCabe notes that the Seattle area still doesn’t have the same type of early-stage angel investment ecosystem as the Bay Area, adding that investors here “seem to be more risk-averse, more rigid in investment theses, and more traditional.”

McCabe does have a unique view on raising early-stage capital in both areas having graduated from Y Combinator and raised $275,000 from Esther Dyson and FF Angel. In the most recent round that just closed, she raised $250,000 cash from Founder’s Co-op, Silicon Valley angel investor Dave McClure and Boston-based Apricot Capital.

The company plans to use the new cash to develop algorithms that provide personalized health recommendations.

“Our new project, in development now, will become your very own personal health improvement coach for any change you want to make,” said Benson. “It’s a seemingly-magical, motivational personal health improvement wizard from the future.”

That’s a hot area right now, with other companies such as Ignition-backed Keas and Seattle’s Limeade also trying to carve out territory in the niche.

Habit Labs will continue to operate the Health Month game, which has attracted more than 40,000 users to date. Game players use the the service to improve diet, fitness, mental health, relationships or financial health.

Previously on GeekWire: Buster Benson sells popular iPhone app, focuses efforts on new social game

John Cook is co-founder of GeekWire. Follow on Twitter: @geekwirenews and Facebook.

  • Greg

    Very cool!  Congrats, Buster!

  • Anonymous

    Two (now three) really smart people tackling a really interesting problem should be every investor’s dream. I’ve seen a glimpse of what these folks are working on and I must say that I’m impressed by the magnitude of the vision and the thoughtfulness in the execution.

    P.S. In the spirit of encouraging entrepreneurship in Seattle, I am posting this comment on GeekWire instead of that other tech blog.

    • http://twitter.com/jensmccabe Jen S. McCabe

      Thanks Evan! :) The feeling is entirely mutual. When you need me to get a Kindle and be a beta tester just give the word. 

  • Guest

    Congratulations to Buster! This is great news for Seattle innovation.

  • http://josephsunga.com Joseph Sunga

    Awesome looking forward to seeing what’s in stealth. More likely than not, it’s going to be awesome. Good job guys!

    • http://twitter.com/jensmccabe Jen S. McCabe

      Danke Joe! :) 

  • http://twitter.com/RedRussak ‘Red’ Russak

    Yet another incredible Startup to come out of Seattle! It’s people like Jen and Buster that make me proud to say “I’m part of the Seattle startup scene!”

    • http://twitter.com/jensmccabe Jen S. McCabe

      Red – we’re blushing. Seattle has a fantastic community. Wish some of my Valley friends would pay closer attention. But then we’d have to wait longer for coffee, so it’s not all bad…

    • http://twitter.com/jensmccabe Jen S. McCabe

      Red – we’re blushing. Seattle has a fantastic community. Wish some of my Valley friends would pay closer attention. But then we’d have to wait longer for coffee, so it’s not all bad…

    • http://twitter.com/jensmccabe Jen S. McCabe

      Red – we’re blushing. Seattle has a fantastic community. Wish some of my Valley friends would pay closer attention. But then we’d have to wait longer for coffee, so it’s not all bad…

    • http://twitter.com/jensmccabe Jen S. McCabe

      Red – we’re blushing. Seattle has a fantastic community. Wish some of my Valley friends would pay closer attention. But then we’d have to wait longer for coffee, so it’s not all bad…

  • http://twitter.com/matt_storms matt_storms

    After Seattle I think the best place is Utah. I moved here 5 years ago and I am really impressed at how many startups are happening around me on a daily basis. 

  • http://twitter.com/matt_storms matt_storms

    After Seattle I think the best place is Utah. I moved here 5 years ago and I am really impressed at how many startups are happening around me on a daily basis. 

  • Bob Crimmins

    Terrific story, Jen… welcome to Seattle!  It’s gratifying to pull great entrepreneurs to Seattle.  Hope to bump into you around the community.

  • Ty Wolfe-Jones

    Congrats Buster! Being an avid HealthMonther for more than 8 months now I can say it’s a great product with a great start!